RSA Tapped as Lead HealthSouth Bond Suit
Plaintiff

June 27, 2003 (PLANSPONSOR.com) - A federal judge in
Birmingham, Alabama has named that state's public pension
system as the lead plaintiff in suits filed by bondholders
against HealthSouth Corp, stemming from losses caused by a
huge accounting fraud.

US District Judge Karon Bowdre said The Retirement
Systems of Alabama (RSA) would represent all bondholders
that have filed suit against the Birmingham-based medical
services and rehabilitation company, according to
an Associated Press report.

David Bronner, RSA chief executive officer,
asked for the position in April, listing his fund’s
HealthSouth losses at more than $18 million amid a fraud
the government contends totaled some $2.5 billion
(See
Bronner: Make RSA Lead HealthSouth Plaintiff).

In all, Alabama fund managers said HealthSouth issued more
than $3 billion worth of bonds during the period the
government contends HealthSouth was overstating earnings to
meet Wall Street forecasts. Eleven former HealthSouth
executives have since pleaded guilty to fraud charges,
including all five of the company’s chief financial
officers.

RSA was also a key player in the recent US Airways
turnaround. The RSA invested $240 million in equity and
$500 million in debt and will hold the lead investor
position with a 36.6% stake and receive eight seats on a
newly reconstituted 15-member Board of Directors. It will
receive 19.7 million shares, as well as the entire issue
of new preferred shares. That will give the RSA 72%
voting control, due to the combination of common and
preferred holdings. (See
US Airways Reaches Tentative Agreements with Unions,
RSA
).